Observations and provocations from The Times' Opinion staff

The White House wishes away the cost of contraception coverage

February 10, 2012 | 10:33
am

The Obama administration announced Friday that it's not backing away from the mandate that employers affiliated with religious institutions include contraception in their health insurance coverage. Instead, it's relying on magical thinking in the hope of making the political firestorm disappear.

The administration said it has come up with a win-win for employers affiliated with religious groups that object to contraception (such as Catholic universities and hospitals) and their female employees who want free access to birth control. It plans to revise its health insurance rules to exempt those employers from having to provide coverage for contraception. At the same time, however, it will require insurers to restore the dropped coverage at no cost to those employers' workers.

Sounds great, right? Churches won't have to subsidize contraception, and their workers won't have to pay for it! That's a considerable savings -- birth-control pills can cost $600 a year.

Except that the money has to come from somewhere. This is the point that advocates of contraception coverage routinely gloss over. The Affordable Care Act required insurers to cover preventive services with no out-of-pocket costs, on the theory that it would promote better public health and save money in the long run. It left a federal task force to decide what those services should be; the group later included contraception on the list. As a consequence, the cost of every preventive service will be buried in every policyholder's monthly insurance premiums. In other words, what appears to be free to the user is actually being paid for by everyone.

Here's where the magical thinking comes in. The following is from the fact sheet the White House released Friday:

Covering contraception saves money for insurance companies by keeping women healthy and preventing spending on other health services. For example, there was no increase in premiums when contraception was added to the Federal Employees Health Benefit System and required of non-religious employers in Hawaii. One study found that covering contraception lowered premiums by 10 percent or more.

Making everyone in a pool carry coverage whether they need it or not spreads the cost, saving money for those who really do need it and who'd choose to carry it if it were merely optional. But costs faced by the insurer are the same -- and when the care is provided with no out-of-pocket costs, the insurer's costs are likely to go up because more people will use it. Such is likely to be the case with contraception.

The administration's bet is that the cost of all those birth-control and morning-after pills, among other forms of contraception, will be more than offset by a reduction in other healthcare costs. A report by the Institutes of Medicine backs up the White House; it found that contraceptive use would save $19.3 billion a year -- far more than the estimated $5 billion annual cost of unintended pregnancies.

But whether this particular mandate produces that kind of result is something only time will tell. Although 28 states require insurers to cover contraception, the new federal rules are the first to require that contraceptives be available at no cost. The only certain result is that more women will get prescriptions filled for contraceptives. There will be a short-term cost to that, unquestionably; the administration's hope is that there will be long-term savings.